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Barclays, Bank of America Executives See Rising M&A Ahead

Oct. 22 (Bloomberg) -- Mergers and acquisitions activity
will probably gain momentum in the coming months as European
companies get the confidence to embark on transactions, said
investment bankers at Bank of America Corp. and Barclays Plc.

Mark Warham, head of Europe, Middle East and Africa mergers
at Barclays, Luigi Rizzo, who oversees EMEA M&A at Bank of
America and Chris Ventresca, global co-head of M&A at JPMorgan
Chase & Co., said at the Bloomberg Dealmakers Summit in London
today the recent stability in the European economy should spur
companies to acquire and sell assets in 2014.

“In recent months, things got a little bit more busy, a
little bit more optimistic,” said Warham. “There’s an
increased level of dialogue, and I would expect it to lead to
increased transactions next year.”

The volume of takeovers in the third quarters climbed 42
percent to $674 billion this year from a year earlier, according
to data compiled by Bloomberg. Vodafone Group Plc’s $130 billion
proposed sale of its 45 percent stake in Verizon Wireless to
Verizon Communications Inc. in September led to a jump in deals
in the telecommunications and technology industries.

‘Confidence Rising’

Companies on European exchanges raised about $17 billion in
initial public offerings this year, compared with $10 billion in
the same period last year, as strengthening economies drew
investors, data compiled by Bloomberg show.

“We’ve seen a lot of divestments in the U.S.,” said Pip
McCrostie, global vice chairman for transaction advisory
services at Ernst & Young LLP. “I’m seeing that trend moving
toward Europe with the confidence rising -- we’re starting to
see some momentum there. It’s all on condition of no major
geopolitical issue arising.”

Bank of America’s Rizzo said that there’s “a fair amount
of interest” in Europe.

“The equity and M&A markets tend to feed into each
other,” he said. “There’s a number of international companies
that look at Europe and think there maybe opportunities.”

The euro-area recovery is economy showing signs of
strengthening after emerging from a recession. A gauge of
services, based on a survey of purchasing managers by London-based Markit Economics, climbed in September to the highest in
more than two years. In Germany, business confidence probably
increased in October, a Bloomberg survey shows.

Longer-Term Horizon

“As people are feeling the European economy stabilize, you
will see more companies willing to make that investment, taking
that longer-term horizon view,” said JPMorgan’s Ventresca.

The pace of European transactions spurred by private-equity
firms is also set to accelerate, according to John Huwiler,
global head of mergers at Jefferies Group Inc. They are also
looking for investment in southern Europe, he said.

“I think private equity is ready to get back in the buying
game” in Europe, he said.

A number of large and creative deals this year underscore
how M&A is picking up, said Gregg Lemkau, global co-head of
mergers and acquisitions of Goldman Sachs Group Inc. He cited
Applied Materials Inc.’s all-stock deal for Tokyo Electron Ltd.
and Verizon’s deal with Vodafone.

“Those are all relatively groundbreaking things in the M&A
world,” Lemkau said.

The positive investor reaction to recent large transactions
could spur more takeovers, and the underlying conditions for
dealmaking are “phenomenal,” he said.

“Shareholders are saying deploy this capital and find
growth,” he said.